H. B. 3013


(By Mr. Speaker, Mr. Kiss)

[Introduced February 14, 2003 ; referred to the

Committee on Government Organization then Finance.]





A BILL to amend and reenact sections ten-a, ten-b, ten-c, ten-d and ten-e, article three, chapter twelve of the code of West Virginia, one thousand nine hundred thirty-one, as amended; and to further amend said article by adding thereto a new section, designated section ten-g, all relating to the payment card program; providing for additional monitoring; requiring training; requiring administrative penalties including card suspension in certain circumstances; clarifying transactions for which payment cards may not be used; requiring documentation; authorizing emergency rules; amending criminal penalties; authorizing special transaction fees; requiring post audits; requiring reports; expanding the payment card advisory committee; centralizing control in the auditor's office; changing the name of the program and setting effective dates.

Be it enacted by the Legislature of West Virginia:
That sections ten-a, ten-b, ten-c, ten-d and ten-e, article three, chapter twelve of the code of West Virginia, one thousand nine hundred thirty-one, as amended, be amended and reenacted; and that said article be further amended by adding thereto a new section, designated section ten-g, all to read as follows:
ARTICLE 3. APPROPRIATIONS, EXPENDITURES AND DEDUCTIONS.
§12-3-10a. Payment card program.
(a) Notwithstanding the provisions of section ten of this article, payment of claims may be made through the use of the state purchasing card program, hereinafter designated and to be known as the state payment card program, authorized by the provisions of this section. Any reference in this code to the purchasing card program shall be considered a reference to the payment card program. The auditor in cooperation with the secretary of the department of administration, may establish a shall continue the state purchasing payment card program for the purpose of authorizing all spending units of state government to use a purchasing payment card as an alternative payment method when making small dollar purchases. The purchasing payment card program shall be conducted so that procedures and controls for the procurement and payment of goods and services are made more efficient. The program shall permit spending units to use a purchase payment charge card to purchase goods and services. When a payment card is used, the purchase must be made in compliance with all applicable statutes, rules, policies and procedures governing the purchase. The auditor shall biennially review the levels of use and the practices of cardholders and shall establish criteria for termination of those payment cards not efficiently used. The auditor shall also biennially analyze the number of payment cards held by each agency and establish limits on that number when appropriate and shall provide a written report to the Legislature's joint committee on government and finance no later than the fifteenth day of November, two thousand three, regarding the progress of the review. The amount of any one purchase made with the purchase payment charge card shall not exceed the amount contained in the jointly proposed rules of the auditor and the purchasing division of the department of administration proposed applicable legislative rule approved in accordance with the provisions of article three, chapter twenty-nine-a of this code: Provided, That purchasing payment cards may not be utilized used for the purpose of obtaining cash advances, whether the advances are made in cash or by other negotiable instrument. Purchases of Goods and services must be received either in advance of or simultaneously with the use of a state purchasing payment card for payment for those goods or services. The auditor, by legislative rule, may eliminate the requirement for vendor invoices and provide a procedure for consolidating multiple vendor payments into one monthly payment to a charge card vendor. Selection of a charge card vendor to provide state purchase payment cards shall must be accomplished by competitive bid. The purchasing division of the department of administration auditor shall contract with the successful bidder for provision of state purchase payment charge cards. Purchase Payment charge cards issued under the program shall be used for official state purchases only. The auditor and the director of the purchasing division of the department of administration shall jointly propose rules for promulgation in accordance with the provisions of article three, chapter twenty-nine-a of this code to govern the implementation of the purchase payment card program.
(b) For purposes of the payment card program, "spending unit" means any department, agency, board, commission, officer, authority, subdivision or institution of state government for or to which an appropriation has been made or is to be made by the Legislature. The head of each spending unit participating in the payment card program or his or her designee shall designate one or more payment card coordinators and one or more payment card reconciliation officers to serve the spending unit or subdivisions of the spending unit: Provided, That upon approval by the auditor a spending unit or subdivision thereof with thirty or fewer employees and no more than ten cardholders may designate one or more employees to fulfill the roles of both payment card coordinator and payment card reconciliation officer: Provided however, That the auditor may waive the requirement of a reconciliation officer when the auditor considers it appropriate to do so based on the circumstances related to the agency and the internal controls therein. The appointees shall attend annual training consisting of not less than six classroom hours conducted by the auditor. It is the duty of payment card coordinators and reconciliation officers to assure that cardholders comply with all relevant statutes, rules and procedures. No payment card may be issued to or used by a payment card coordinator or reconciliation officer.
(c) Each payment card coordinator must hold a position of knowledge and experience within the purchasing cycle of the respective spending unit or subdivision of the spending unit. The head of a spending unit or designee shall appoint payment card coordinators in a sufficient number to allow thorough and timely performance of their responsibilities. Payment card coordinators shall, to the extent possible, occupy a position that promotes a level of independence from the cardholders subject to the coordinator's oversight authority. Authority to approve payment card monthly master invoices resides with the payment card coordinator.
(d) The head of a spending unit or designee shall appoint payment card reconciliation officers in a sufficient number to allow thorough and timely performance of their responsibilities. Each payment card reconciliation officer must possess accounting expertise consistent with the size of the respective spending unit or subdivision thereof and the aggregate amount of payment card transactions to be reconciled each month. A payment card reconciliation officer shall reconcile all transactions which appear on the officer's spending unit's monthly master invoice as received from the payment card provider. The officer shall insure that all the transactions were accomplished in compliance with existing policies and procedures related to the payment card program. Upon completion of the reconciliation process, the reconciliation officer shall report results to the payment card coordinator. With the exception of agencies exempted herein, no agency may allow a payment card reconciliation officer to approve a monthly master invoice for payment or assume any of the duties of the payment card coordinator.
(e) Before an employee may be issued a payment card, the employee must have successfully completed a training session specifically designed for new cardholders. All cardholders are required to complete three hours of training biennially which may be conducted by the auditor, or by the agency's designated payment card coordinator: Provided, That at least one hour of training every two years shall relate to ethics and may be conducted by the auditor, the commission on special investigations, the ethics commission or by the agency's designated payment card coordinator. All training shall be in a format approved by the auditor.
(f) (1) The auditor shall impose by rule penalties, including, but not limited to, suspension or termination of card privileges, and fines for violation of any of the provisions of this article, related rules or established purchasing policies or procedures involving the use of a payment card. These rules must set forth graduated penalties for misuse. These penalties shall include, but not be limited to, the following: The auditor shall impose a thirty-calendar day suspension of payment card authority of a spending unit or subdivision thereof upon the auditor's determination that the head of the spending unit has failed or refused to take corrective action as recommended by the auditor, or that the spending unit has a continuous ongoing practice of misusing the payment card by engaging in unlawful conduct related to the payment card, or that the spending unit has engaged in a prohibited practice related to the use of the payment card. Prohibited practices include, but are not limited to, the following:
(A) Stringing transactions or splitting transactions, which means the intentional manipulation of the ordering, billing or payment process in order to circumvent the transaction limit including splitting an invoice for more than the individual transaction limit into more than one transaction or colluding with a vendor to split an order into separate invoices;
(B) Paying for 1099 reportable transactions without generating the appropriate 1099 form;
(C) Failing to properly document and reconcile payment card transactions;
(D) Purchasing goods or services the acquisition of which with a payment card is prohibited by law. Prohibited purchases include, but are not limited to, payment for the following:
(i) Alcoholic beverages;
(ii) Cash advances;
(iii) Legal services;
(iv) Firearms and ammunition, except when purchased by law-enforcement personnel;
(v) Insurance premiums;
(vi) Travel related gasoline;
(vii) Travel related expenses; and
(viii) Building leases.
(E) Permitting cardholders to acquire goods or services for personal benefit, or to accept bribes, gratuities or kickbacks from vendors.
(2) In those instances in which a spending unit consists of two or more identifiable subdivisions, the auditor may limit the suspension to one or more subdivisions of the spending unit in the event the abuse of payment card authority is clearly shown to be limited to one or more subdivisions, as opposed to the spending unit as a whole.
(3) If the authority of a spending unit or subdivision to participate in the payment card program is reinstated subsequent to an initial thirty-calendar day suspension, and the spending unit or subdivision is found by the auditor to be eligible for suspension a second time within a period of six months following the date of reinstatement, the auditor shall impose a second suspension for the remainder of the month of notification of the violation and six calendar months thereafter.
(4) If the authority of a spending unit or subdivision thereof to participate in the payment card program is reinstated subsequent to a second suspension, and the spending unit or subdivision is found by the auditor to have committed acts within six months following the date of reinstatement which would again require suspension, the auditor shall impose a suspension for the remainder of the month of notification of the violation and for twelve calendar months thereafter.
(g) No payment card vendor may provide a bribe, gratuity, or kickback to a payment cardholder or a state spending unit.
(h) The auditor has the authority to suspend the privilege of a vendor to participate in the payment card program when the auditor has reason to believe that such vendor has violated any of the statutes, rules, policies or procedures concerning the payment card. Every vendor whose privilege to participate has been so suspended shall be notified thereof in writing by certified mail.
(i) Any vendor whose privilege to participate in the payment card program has been suspended under the authority provided in the preceding subsection may submit to the auditor a written request for review. Upon receipt of the request for review, the auditor shall provide for an independent review by an individual appointed by the auditor and vested with authority to set aside the suspension.
(j) The auditor shall report twice each year to the commission on special investigations and the purchasing division any material payment card audit findings encountered with individual spending units and with the payment card program as a whole, any suspensions occurring within the preceding six months, and the total dollar amount and number of violations as set forth in this section, including violations by vendors. The reports must cover six-month periods beginning the first day of July and the first day of January of each year, and are due thirty calendar days following the end of the period covered by the report. The report must include any existing plan or any actions taken by the auditor to address the violations.
(k) The auditor has the authority to prohibit uses of the state payment card, consistent with the best interests of the state.
(l) The auditor is responsible for reviewing documentation required of spending units as well as the spending unit's internal operating procedures related to the unit's participation in the purchasing card program. The director of the purchasing division shall regularly notify the auditor of any payment card transactions that are in violation of purchasing statutes, rules, policies and procedures. Payment card documentation must be in compliance with the following minimum criteria:
(1) Each payment card transaction must be documented on a log sheet and accompanied by a detailed itemized receipt;
(2) Each log sheet must set forth the date the order is placed, the name of the vendor, the name and address of the spending unit or sub-spending unit, the name of the individual responsible for the transaction, an itemized list of each commodity or service being purchased and the object code for each expenditure;
(3) Any shipping charges must be listed separately from the itemized costs and the total of all costs for the transaction on the detailed itemized receipt;
(4) Log sheets may be generated by electronic means or a permanent paper copy either of which must be signed by the responsible payment card holder;
(5) If the permanent paper copy of the log sheet contains the required information, it may also be used to fulfill the requirements of section ten-f of this article pertaining to receiving reports.
(m) In accordance with article three, chapter twenty-nine-a of this code, the auditor may propose for legislative approval rules establishing special criteria for the use of a payment card during a period of officially declared emergencies or disasters.
§12-3-10b. Fraudulent or unauthorized use of payment card prohibited; criminal penalties; restitution; set off of pension benefits and potential disciplinary action.

It is unlawful for any person to use a state purchase payment card, issued in accordance with the provisions of section ten-a of this article, to make any purchase of payment for goods or services in a manner which is contrary to the provisions of section ten-a of this article, of article three, chapter five-a of this code, of any other provision of this code governing the purchase of goods or services or the rules promulgated pursuant to that section those provisions. Any person who violates the provisions of this section article or applicable rules is guilty of a felony, misdemeanor and, upon conviction thereof, shall be confined in the penitentiary not less than one nor more than five years, or fined no more than five thousand dollars fined no more than two thousand dollars or confined in the county or regional jail no more than one year, or both fined and imprisoned: Provided, That a person who violates provisions of section ten-a of this article and thereby receives goods or services for personal use or benefit in an amount in excess of one thousand dollars is guilty of a felony and, upon conviction thereof, shall be fined not more than ten thousand dollars or imprisoned in a state correctional facility not less than one nor more than ten years, or both fined and imprisoned. Any person who violates section ten-a or applicable rules and who thereby receives goods or services for personal use or benefit must pay restitution to the state in the amount of the cost of the goods or services. Notwithstanding any other provision to the contrary, upon determination by the state auditor that a person has received goods or services for personal use, the employer has the right of set off and attachment of the person's pension benefits. Employers shall consider an employee's violation of this article or the rules promulgated thereunder and take appropriate disciplinary action.
§12-3-10c. Transaction fees; special fees; disposition of fees.
(a) In order to promote and enhance the use of the state purchasing payment card program established by the provisions of section ten-a of this article and in order to maintain and develop the fiscal operations and accounting systems of the state, the auditor and the treasurer may assess a joint transaction fees fee for all each financial documents document that will be processed on the central accounting system. Such transaction fees The transactions shall be prescribed by legislative rule proposed in accordance with article three, chapter twenty-nine-a of this code and may include the following:
(2) (1) A transaction fee not to exceed one dollar per transaction to be assessed against spending units of state government for every transaction received, electronically or otherwise, by the auditor from the centralized accounting system; and
(1) (2) A penalty fee not to exceed five times the transaction fee to be assessed against spending units of state government who submit claims for payment of goods and services when those claims are authorized to be paid by use of a state purchasing payment card and the spending unit has failed to utilize use the state purchasing payment card.
(b) All fees collected under this section shall be deposited into the "Technology Support and Acquisition Fund" which is hereby created in the state treasury to be administered by the auditor. The auditor and treasurer shall use moneys deposited in the fund to maintain and develop the state purchasing payment card program, support the fiscal operations of the state, including the state centralized accounting system, and to acquire and improve the technology required to support these functions. If revenues accruing to the technology support and acquisition fund are not adequate to cover the cost associated with this mandate, those funds in the payment card administration fund, accrued pursuant to section ten-d of this article, may also be used for this purpose: Provided, That expenditures from the fund are authorized from collections and are to be made only in accordance with an appropriation by the Legislature and in accordance with the provision of article three of this chapter and upon fulfillment of the provisions set forth in article two, chapter five-a of this code: Provided, however, That for the fiscal year ending the thirtieth day of June, one thousand nine hundred ninety-eight, expenditures from the fund may be made from collections: Provided further, That the Legislature is exempt from any fees imposed under this section.
(c) Notwithstanding any provision of this article or legislative rule to the contrary, in the event the authority of a spending unit or subdivision thereof to use the state payment card is suspended pursuant to guidelines set forth by legislative rule, the auditor shall assess a special suspension fee equal to the amount of up to five times the maximum penalty fee. The auditor shall impose the suspension fee upon each transaction of the spending unit or subdivision thereof for the duration of the suspension. Special suspension fees must be deposited into the payment card administration fund created pursuant to section ten-d of this article.
§12-3-10d. Payment card fund created; expenditures; post audit responsibilities.

(a) All money received by the state pursuant to any agreement with vendors providing purchasing payment charge cards, and any interest or other return earned on the money, shall must be deposited in a special revenue revolving fund designated the "Purchasing Payment Card Administration Fund," in the state treasury to be administered by the auditor. All expenses by the auditor in the implementation, and operation, and ongoing monitoring of the purchasing payment card program, or arising from the auditor's post audit responsibilities, shall be paid from the fund. If revenues accruing to the payment card administration fund are not adequate to cover the costs associated with this mandate, those funds in the technology support and acquisition fund accrued pursuant to section ten-c of this article, may also be used for this purpose. Expenditures from the fund funds shall be made in accordance with appropriations by the Legislature pursuant to the provisions of article three, chapter twelve of this code and upon fulfillment of the provisions of article two, chapter five-a of this code.
(b) The auditor shall regularly cause a post audit of every spending unit exercising the payment card authority granted pursuant to this article and shall quarterly provide the legislative auditor's office with the proposed audit schedule. The auditor shall examine for compliance with appropriate accounting practices including, but not limited to, all applicable statutes, rules, policies and procedures. Payment card post audits must be conducted by individuals having a degree in accounting and knowledge in the field of auditing for compliance: Provided, That employees of the auditor's office employed for these purposes on the effective date of this article are exempt from the degree requirement. Upon completion the audits will be reviewed and approved by a certified public accountant duly licensed by the state of West Virginia and employed by the West Virginia state auditor's office.
§12-3-10e. Payment card advisory committee created; purpose; membership; expenses.

There is created continued a purchasing card advisory committee, hereafter to be known as the payment card advisory committee, to enhance the development and implementation of the purchasing payment card program. The committee shall solicit input from state agencies and make recommendations to improve the performance of the purchasing payment card program. The committee consists of eleven twelve members to be appointed as follows:
(1) The auditor shall serve as chairperson of the committee and shall appoint three members from the state college system of West Virginia and the university system of West Virginia, one member from the department of health and human resources, and one member from the division of highways, and one member to be selected by the secretary of military affairs and public safety;
(2) The secretary of the department of administration shall appoint one member from the information services and communications division, one member from the financial accounting and reporting section, and one member from the purchasing division;
(3) The secretary of the department of tax and revenue shall appoint one member from the department of tax and revenue; and
(4) The state treasurer shall appoint one member from that office.
Committee members shall be appointed for a term of one year, commencing on the first day of July, one thousand nine hundred ninety-eight. Committee members shall receive reimbursement for expenses actually incurred in the performance of their duties on the committee.
§12-3-10g. Effective date; emergency rules.
The amendments to sections ten-a, ten-b, ten-c and ten-d of this article passed in the year two thousand three are effective the first day of July, two thousand three. The state auditor shall implement these changes by promulgating emergency rules to become effective the thirtieth day of June, two thousand three.


NOTE: The purpose of this bill is to provide for additional internal controls and procedures for the purchase card program and to rename it the payment card program.
Strike-throughs indicate language that would be stricken from the present law, and underscoring indicates new language that would be added.

Section 12-3-10g is new; therefore, strike-throughs and underscoring have been omitted.